Correlation Between Pyrum Innovations and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Pyrum Innovations and Elkem ASA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pyrum Innovations and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyrum Innovations AG and Elkem ASA, you can compare the effects of market volatilities on Pyrum Innovations and Elkem ASA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pyrum Innovations with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyrum Innovations and Elkem ASA.
Diversification Opportunities for Pyrum Innovations and Elkem ASA
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pyrum and Elkem is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pyrum Innovations AG and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Pyrum Innovations is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pyrum Innovations AG are associated (or correlated) with Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Pyrum Innovations i.e., Pyrum Innovations and Elkem ASA go up and down completely randomly.
Pair Corralation between Pyrum Innovations and Elkem ASA
Assuming the 90 days trading horizon Pyrum Innovations is expected to generate 1.38 times less return on investment than Elkem ASA. But when comparing it to its historical volatility, Pyrum Innovations AG is 1.0 times less risky than Elkem ASA. It trades about 0.06 of its potential returns per unit of risk. Elkem ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,090 in Elkem ASA on December 5, 2024 and sell it today you would earn a total of 92.00 from holding Elkem ASA or generate 4.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pyrum Innovations AG vs. Elkem ASA
Performance |
Timeline |
Pyrum Innovations |
Elkem ASA |
Pyrum Innovations and Elkem ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pyrum Innovations and Elkem ASA
The main advantage of trading using opposite Pyrum Innovations and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyrum Innovations position performs unexpectedly, Elkem ASA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Elkem ASA will offset losses from the drop in Elkem ASA's long position.Pyrum Innovations vs. Eidesvik Offshore ASA | Pyrum Innovations vs. Techstep ASA | Pyrum Innovations vs. Nidaros Sparebank | Pyrum Innovations vs. Polaris Media |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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